When Quantifying Country Risk:​

question 4

Multiple Choice

When quantifying country risk:​

• A) ​weights should be equally allocated among factors.
• B) ​weights should be assigned to the political and financial factors according to their perceived importance.
• C) ​it is not generally necessary to construct separate ratings for political and financial risk since these will be equally weighed in the final analysis.
• D) ​the derived factors will be identical for all MNCs conducting business in that country.

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Definitions:

Consolidation

The process of combining the financial statements of separate companies, subsidiaries, or divisions, into single financial statements that represent the total assets, liabilities, equity, income, expenses, and cash flows of the parent company.

Ownership Interest

A share or stake in an entity that gives the holder a claim on part of the entity's assets and profits.

Treasury Stock Approach

A method used in calculating the share price impact of stock options by assuming that any proceeds from option exercises are used to buy back shares at the current price.

Parent's Common Stock

The equity interest held in a parent company, representing a claim on its assets and earnings.